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Major oil company makes multi-billion dollar move away from fossil fuels

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The world’s biggest mining company is moving away from oil and gas in a multi-billion dollar exit away from fossil fuels

The BHP Group will review its business in petroleum mining and consider a trade sale. Projections suggest the company will earn more than $2 billion this year. The deliberations are still at an early stage and BHP is yet to make any final decision.

An inside source told Bloomberg that the company is worth approximately $15 billion or more. The move comes as BHP follows suit of Rival Anglo American Plc, which has already exited thermal coal under investor pressure.

BHP has long said it plans to make money from oil for the next decade. However, the inside source says the company wants to avoid getting stuck with assets that are increasingly difficult to sell as the world becomes more climate-friendly.

BHP Is Said to Mull Oil Exit in Retreat From Fossil Fuels - Bloomberg

If the price is right

Reports suggest the company plans to exit while it can still get a good price for oil. Unlike other rivals in the oil space, BHP doesn’t deend solely on the energy business for profit. The company’s iron ore and copper units dwarf its energy business.

Experts say that it’s good timing for the company to leave its dealings with oil. The economic recovery from Covid-19 has made oil producers fortunes, with Brent oil futures having rallied about 60% over the past year.

In contrast, BHP’s attemps to leave thermal coal have so far been rather disappointing. Early bids for mines in Australia came in lower than the company’s own valuations last year.

Source

BHP positions itself as a future-forward company

A decision to move away from both thermal coal and petroleum would help BHP to position itself as a future-forward company.

Experts also expect the miner to sanction a huge potash mine in Canada next month. This could make it a key supplier of the crop nutrient when production begins.

BHP has been in oil and gas since the 1960s. It has assets both in the Gulf of Mexico and off the coast of Australia. It produced 102.8 million barrels of oil in the last financial year.

“BHP is an outlier in the mining sector for its petroleum business,” says RBC Capital Markets analyst Tyler Broda.

He suggests that this is often cited in discussions with investors as a “point of detraction”.

“With rising ESG pressures facing the industry, but also as this business potentially enters into a re-investment phase, we can see why management might be contemplating an exit.”

Broda estimates the business is worth about $14.3 billion.

Natasha is an Associate Producer at ticker NEWS with a Bachelor of arts from Monash University. She has previously worked at Sky News Australia and Monash University as an Online Content Producer.

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US energy stocks surge amid economic growth and inflation fears

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Investors are turning to U.S. energy shares in droves, capitalizing on surging oil prices and a resilient economy while seeking protection against looming inflationary pressures.

The S&P 500 energy sector has witnessed a remarkable ascent in 2024, boasting gains of approximately 17%, effectively doubling the broader index’s year-to-date performance.

This surge has intensified in recent weeks, propelling the energy sector to the forefront of the S&P 500’s top-performing sectors.

A significant catalyst driving this rally is the relentless rise in oil prices. U.S. crude has surged by 20% year-to-date, propelled by robust economic indicators in the United States and escalating tensions in the Middle East.

Investors are also turning to energy shares as a hedge against inflation, which has proven more persistent than anticipated, threatening to derail the broader market rally.

Ayako Yoshioka, senior portfolio manager at Wealth Enhancement Group, notes that having exposure to commodities can serve as a hedge against inflationary pressures, prompting many portfolios to overweight energy stocks.

Shell Service Station

Shell Service Station

Energy companies

This sentiment is underscored by the disciplined capital spending observed among energy companies, particularly oil majors such as Exxon Mobil and Chevron.

Among the standout performers within the energy sector this year are Marathon Petroleum, which has surged by 40%, and Valero Energy, up by an impressive 33%.

As the first-quarter earnings season kicks into high gear, with reports from major companies such as Netflix, Bank of America, and Procter & Gamble, investors will closely scrutinize economic indicators such as monthly U.S. retail sales to gauge consumer behavior amidst lingering inflation concerns.

The rally in energy stocks signals a broadening of the U.S. equities rally beyond growth and technology companies that dominated last year.

However, escalating inflation expectations and concerns about a hawkish Federal Reserve could dampen investors’ appetite for non-commodities-related sectors.

Peter Tuz, president of Chase Investment Counsel Corp., highlights investors’ focus on the robust economy amidst supply bottlenecks in commodities, especially oil.

This sentiment is echoed by strategists at Morgan Stanley and RBC Capital Markets, who maintain bullish calls on energy shares, citing heightened geopolitical risks and strong economic fundamentals.

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Money

How Australians lose nearly $1 billion to card scammers in a year

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A recent study by Finder has unveiled a distressing trend: Australians are hemorrhaging money to card scams at an alarming rate.

The survey, conducted among 1,039 participants, painted a grim picture, with 2.2 million individuals – roughly 11% of the population – falling prey to credit or debit card skimming in 2023 alone.

The financial toll of these scams is staggering. On average, victims lost $418 each, amounting to a colossal $930 million collectively across the country.

Rebecca Pike, a financial expert at Finder, underscored the correlation between the surge in digital transactions and the proliferation of sophisticated scams.

“Scammers are adapting, leveraging sophisticated tactics that often mimic trusted brands or exploit personal connections. With digital transactions on the rise, it’s imperative for consumers to remain vigilant and proactive in safeguarding their financial assets,” Pike said.

Read more – How Google is cracking down on scams

Concerning trend

Disturbingly, Finder’s research also revealed a concerning trend in underreporting.

Only 9% of scam victims reported the incident, while 1% remained oblivious to the fraudulent activity initially. Additionally, 1% of respondents discovered they were victims of bank card fraud only after the fact, highlighting the insidious nature of these schemes.

Pike urged consumers to exercise heightened scrutiny over their financial statements, recommending frequent monitoring for any unauthorised transactions.

She explained the importance of leveraging notification services offered by financial institutions to promptly identify and report suspicious activity.

“Early detection is key. If you notice any unfamiliar transactions, don’t hesitate to contact your bank immediately. Swift action can mitigate further unauthorised use of your card,” Pike advised, underscoring the critical role of proactive measures in combating card scams.

As Australians grapple with the escalating threat of card fraud, Pike’s counsel serves as a timely reminder of the necessity for heightened vigilance in an increasingly digitised financial landscape.

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Money

Workers rush back to their desks over job fears

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Workers across Australia are rushing back to their desks, driving office utilisation rates to their highest levels since February 2020.

Tuesdays, Wednesdays, and Thursdays emerge as the busiest in-office days, contrasting with the continued reluctance to return on Fridays.

This insight, drawn from XY Sense data based on 18 enterprise customers in Australia employing approximately 68,000 individuals across 127 buildings, reflects a significant shift in workplace dynamics.

The surge in office attendance coincides with a resurgence in workplace attendance mandates and policies linking physical presence to bonuses and performance reviews.

However, co-founder of XY Sense, Alex Birch, suggests that rising job insecurity, rather than these policies, primarily drives this behavioral shift.

“The pendulum has moved towards the employer, and therefore people feel more obliged to go back into work,” commented Mr. Birch.

Job market

Danielle Wood, chairwoman of the Productivity Commission, anticipates this trend to persist as the job market softens.

She notes a disparity between employer and worker perceptions regarding the productivity benefits of hybrid work arrangements, hinting at potential shifts in the employment landscape.

Meanwhile, economists at the e61 Institute observe a partial reversal of the pandemic-induced “escape to the country” trend.

Rent differentials between regional and capital city dwellings, which narrowed during the pandemic, are now widening again.

This trend suggests a diminishing appeal of remote work options and a return to urban commuting.

Aaron Wong, senior research economist at e61, said the emergence of a “new normal,” characterised by a hybrid lifestyle that blends access to office spaces with proximity to lifestyle amenities such as natural landscapes.

While regional rents decline, rents for homes on the urban fringe surge, reflecting evolving preferences shaped by remote work opportunities.

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